Correlation Between Cabot and PPG Industries
Can any of the company-specific risk be diversified away by investing in both Cabot and PPG Industries at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cabot and PPG Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cabot and PPG Industries, you can compare the effects of market volatilities on Cabot and PPG Industries and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cabot with a short position of PPG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cabot and PPG Industries.
Diversification Opportunities for Cabot and PPG Industries
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cabot and PPG is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cabot and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries and Cabot is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cabot are associated (or correlated) with PPG Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPG Industries has no effect on the direction of Cabot i.e., Cabot and PPG Industries go up and down completely randomly.
Pair Corralation between Cabot and PPG Industries
Considering the 90-day investment horizon Cabot is expected to generate 2.15 times more return on investment than PPG Industries. However, Cabot is 2.15 times more volatile than PPG Industries. It trades about 0.0 of its potential returns per unit of risk. PPG Industries is currently generating about -0.1 per unit of risk. If you would invest 10,919 in Cabot on August 24, 2024 and sell it today you would lose (52.00) from holding Cabot or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cabot vs. PPG Industries
Performance |
| Timeline |
| Cabot |
| PPG Industries |
Cabot and PPG Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cabot and PPG Industries
The main advantage of trading using opposite Cabot and PPG Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cabot position performs unexpectedly, PPG Industries can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PPG Industries will offset losses from the drop in PPG Industries' long position.| Cabot vs. Eastman Chemical | Cabot vs. Olin Corporation | Cabot vs. LyondellBasell Industries NV | Cabot vs. Air Products and |
| PPG Industries vs. Air Products and | PPG Industries vs. Linde plc Ordinary | PPG Industries vs. Ecolab Inc | PPG Industries vs. LyondellBasell Industries NV |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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